Economy

It’s rather difficult to dissect or analyze policy areas from last night’s horrendous debate. But Freddy Gray and I attempt to do so on the latest episode of his Americano podcast — and considering today’s economic updates, I’ll give it another go.Even in a debate that spent most of its time in the gutter, both President Trump and former vice president Joe Biden had moments of cut-through. For Biden, his call for unity in America felt like a rare throwback to a form of traditional campaigning that tends to play well with watchers at home. For Trump, his most persuasive moments came early in the debate, when he was speaking about the economy.

The UK economy is no longer hibernating; it is 'adjusting'. Today's measures announced by Chancellor Rishi Sunak are designed to help an economy expected to limp through the coming months, quite painfully in certain areas, hopefully on its way to recovery. But are they enough? The role of the government and the employer has switched: the six month jobs support scheme will see the state contribute to workers' wages if needed, but now the employer will be paying over 50 per cent of the costs, with the government paying 22 per cent.

The UK economy continues to bounce back – but it’s the coming months that could pour cold water on a V-shaped recovery. The economy grew 6.6 per cent in July, according to data from the Office for National Statistics, with the return of pubs, restaurants, hairdressers and more non-essential shops giving us another boost back towards pre-Covid levels. But there’s still a long way to go: despite a record-breaking growth rate between May and July, Britain is still nearly 12 per cent below its GDP level in February 2020, having experienced a record-breaking contraction – the biggest seen in 300 years, and the worst of any major economy during the crisis so far.

This week was built up by the Prime Minister to be the moment that would mark the return of economic and social life to robust health. But there was no real attempt by his government to urge people to go back to the office. Even Number 10 has admitted there never was a back to work campaign. In London, the number of Tube journeys made at the beginning of the week — as good an indicator of economic vitality as any — was still far below last year’s levels. In spite of repeated assurances that returning to school is safe and necessary for children’s health, a YouGov poll suggested that nearly one in five parents are still considering keeping their offspring at home. Recent figures from Scotland indicate they are doing precisely that.

How would an independent Scotland have fared during the pandemic? We found out this week on the annual release of Gers, which adds up all Scottish spending and taxes and states the size of the gap. This year it's estimated at about 27 per cent of GDP, according to the Institute for Fiscal Studies, which would make it the worst-hit country in the developed world. It's unlikely that a small country could sustain a deficit of this size even in a pandemic: the UK has been hit bad, but we have the pound and the Bank of England's QE to lower the cost of issuing debt. For a country of five million to run a deficit of 27pc would be far, far harder.

It’s odd to read headlines today saying that the UK has officially entered recession. We’ve known this for months: shops were closed, restaurants shuttered. You couldn’t get a cup of coffee or a haircut, offices were closed and millions furloughed. These were not normal times – but we knew that then, as we know it now. What we didn’t know was how far the economy had contracted, and how much this could be remedied by ending lockdown. The big news today, revealed by official figures released by the Office for National Statistics this morning, starts to answer this. It turns out that our economic hit was one of the hardest in Europe. UK GDP fell 20.

Look past the headline statistics and you’ll see economic reality starting to infiltrate the labour market. Today’s employment figures from the Office for National Statistics mark very little movement from the previous quarter, with employment at 76.4 per cent (down 0.2 per cent on the previous quarter) and unemployment at 3.9 per cent (unchanged from the previous quarter, still hovering at a record-low level). Yet today also marks the biggest decrease in UK employment for a decade, since May 2009 in the wake of the financial crash. For many workers, being temporarily away from paid work is likely to become permanent How can this be?

The Bank of England offers a mixed bag of forecasts today. It now expects Britain’s economic downturn to be less extreme than feared, while also predicting a recovery will take longer than originally thought. The Bank now expects the economy to contract 9.5 per cent in 2020, substantially less than the 14 per cent drop it predicted at the height of the national lockdown. But it joined the Office for National Statistics in revising its optimism for a sharp V-shaped recovery downward, expecting nine per cent growth in 2021, with GDP not returning to pre-Covid-19 levels for another eighteen months. The Bank’s forecast remains one of the most optimistic, still showing the resemblance of a V-shaped recovery. But are these scenarios accurate reflection of what’s to come?

Donald Trump’s tweet mooting an election delay isn’t a sign of strength but weakness. Maybe he’ll say it was just a joke. Maybe it was intended to distract from the bad economic news. Maybe he’s trying to inure the public to the idea of a postponement. Maybe he’s preparing for his post-presidency with a farrago of excuses and complaints and lies. Or maybe Trump is simply flailing, a prospective loser who is already losing it.His erstwhile champion Herman Cain, who denounced the idea of wearing a mask, has just died at 74 from coronavirus complications. His national security adviser has the virus. So does Rep. Louie Gohmert, who refused to wear a mask. Trump’s incessant attempts to depict the pandemic as a hoax have turned out be the palpable fraud.

On a visit to Nottingham this morning, Boris Johnson warned that a second wave of Covid-19 could be on the verge of 'starting to bubble up' in Europe. Meanwhile, he defended his government’s lightning-speed reintroduction of a 14-day quarantine for travellers entering the UK from Spain. But concerns of a second wave are not solely related to Spain or select European countries. Yesterday the Financial Times revealed the Prime Minister’s warning to over a dozen businesses that the threat of another Covid wave in autumn is very real. It's not just what’s happening abroad, but the possibility of infection rates spiking within the UK that has captured the government’s attention.

There’s talk of reparations in the air. Lobbyists from around the world are demanding sin-payments from former colonial powers. Let me add my voice to the clamour on behalf of this island’s indigenous Celtic people. My family are from Llanelli in Carmarthenshire and I believe that my compatriots have an excellent case to make against the Roman empire. This is not an extinct claim – the money is still in play. Britain was invaded by Julius Caesar in 55 BC and his visit was followed up a century later by the Emperor Claudius and his mob. The Roman occupation, which involved the military subjection of the Celtic peoples, lasted for about four centuries.